Friday, September 4, 2009

The Story of Aetna

Aetna was your average billion dollar health insurance company, but they wanted more. So they brought in a guy named Ron Williams to be the new CEO in 2006. Let’s look at some numbers, shall we?

In 2005, the company had $1.1 billion in earnings.Aetna's 2007 revenue, reported in 2008, was $27.6 billion.Aetna's 2008 revenue, reported in 2009, was $31 billion.

Wow!! That was some leap, huh? Bet you wish you had bought Aetna stock back in 2005. How did Ron Williams achieve this phenomenal growth to increase revenue by $26.5 billion in a single year?

He looked at who they were insuring. Any individuals who were costing them a lot of money they got rid of any way they could. Now that’s the American way, isn’t it? Have someone pay lots of money for years, possibly decades, then when it’s time to give them the very thing they had been paying for all this time, cut them loose!! Business as usual or a massive fraud?

Groups were more difficult, they can’t just toss out individuals in groups, that’s kind of the point after all. So Ron looked at which groups were costing Aetna the most money and canceled entire groups. This means entire companies lost their health care because too many of them actually needed that health care the company had been paying for.

So when Ron had trimmed out all the expensive - i.e. sick - people and groups profits went up, so did the stock prices of the company and so did Ron’s bonus checks. He made many millions, all of it by denying health care to sick people. A lot of them probably have died, certainly all suffered some tough times but what the hell, that’s just business and that is what America is all about, right?

He also raised the premiums everyone was paying and cut back on what was covered. Sometimes they get sneaky, they cover drugs but only generics, you'd have to read carefully to catch that one. And they were very careful about only bringing in new people who were healthy. The big one is pre-existing conditions, keeps lots and lots of the very people who need health care the most from getting it, they are the ones forced to go to ER's when something serious could have been prevented by regular visits to their doctor, but they don't have doctors. They can't even pay for the ER visit but hospitals are required by law to treat people when it's an emergency. The hospitals make up the loses by charging more for insured people because that bill will be paid. So everyone's insurance keeps going up because costs keep going up. Don't want to pay for someone else? Guess what, you already are, at the highest possible rate because you are paying for the most expensive medical care there is, ER visits.

Certainly couldn’t be any worse than evil socialism like they have in Canada and Europe - right?

For the record people in those countries would be horrified by this story and it would make them even more thankful they don’t have an American-style health care plan than they already are. And believe me, they ARE already thankful.

In 1993 health insurance companies paid out $.95 in actual health care for every dollar they took in. In 2007 the average is now $.79 for every dollar. Have that go up by a penny and the company’s stock price will fall, have it go down by a penny and stocks will rise. A company’s only motivation today is to pay as little in actual health care as possible.

Nothing personal, just business. Perhaps health care shouldn’t be business as usual? Perhaps profit isn’t the most important thing in the world. I wonder how many people will call me socialist because of that one sentence?

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